Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinApril gold gained 0.2% to close above $1,343 as the dollar fell ahead of the conclusion of the Fed's January meeting on monetary policy. The metal then extended those gains, rising above $1,349 in electronic trade, after the Fed said it expects inflation to increase this year.

The FOMC left interest rates unchanged, as expected, but laid the groundwork in its post-meeting statement for a quarter-point hike when it meets in March. Projecting the economy to expand "at a moderate pace," the Fed said that "inflation on a 12-month basis is expected to rise and stabilize around the Committee's 2% objective."

After falling around 0.4% earlier in the session, the dollar erased those losses immediately after the Fed's statement, then reversed itself again and slid back to a 0.1% loss. Gold briefly surrendered its gained in after-hours trading as the dollar rebounded, then bounced strongly higher to challenge $1,350 as traders focused on expectations for higher inflation. Gold is often used as a hedge against rising prices.

Adding to inflation expectations, wages jumped 0.5% in the fourth quarter to the highest level in nearly three years, reflecting a strong labor market.

Separately, ADP reported 234,000 new jobs were added in the private sector in January, beating expectations. The more-authoritative government nonfarm payrolls report is due Friday.

The other precious metals were mostly higher, with silver and platinum climbing 1.1% and 0.3%, respectively, while palladium dropped 2.8%.

At the Comex close: April gold gained $3.10 to $1,343.10; March silver rose 18 cents to $17.24; April platinum picked up $2.50 to $1,004.30; and March palladium dropped $28.90 to $1,023.55 an ounce.